Gold prices climb after Fed stands pat
New York (Sept 18) Gold futures jumped Friday and eyed a solid weekly gain, with analysts giving credit to the Federal Reserve’s decision to keep interest rates at historically low levels.
Gold for December delivery GCZ5, +1.65% traded up $19.80, or 1.8%, to $1,136.80 an ounce in electronic trading, while December silver SIZ5, +1.88% gained 25 cents, or 1.7%, to $15.24 an ounce.
The yellow metal settled lower Thursday, but then climbed in electronic trading after the U.S. central bank opted to stand pat on rates, though the Fed implied a hike is still on tap before the year’s end.
“Gold seems to be holding on to gains, and perhaps this is a mini-perfect storm for gold,” said William Adams, head of research for Fastmarkets Ltd., in a note Friday. Elements of the storm include “prices are low, other asset classes are relative high [and] interest rates will stay down for longer,” he said.
Analysts on Thursday emphasized that higher interest rates would have hurt gold because it doesn’t pay interest, meaning some investors would step away from it. Plus, higher rates lift the dollar DXY, -0.34% , and a stronger greenback can weigh on dollar-denominated commodities as they become pricier for holders of other currencies.
For the week, gold is on pace for a 3% gain, while silver is up 5%.